BofA Profits Climb 370% in Q4

Merrill advisor force shrinks to less than 14,000 reps, but production tops $1 million a year

CEO Brian Moynihan of Bank of America. (Photo: AP) CEO Brian Moynihan of Bank of America. (Photo: AP)

Bank of America (BAC) reported early Wednesday that its fourth-quarter 2013 profits more than tripled, rising to $3.44 billion, or $0.29 per share, from $732 million, or $0.03, a year earlier — an increase of 370%. Its full-year net income more than doubled to $11.4 billion.

Revenue improved 14% to $22.3 billion, excluding accounting charges. Still, its return on average shareholder’s equity was 5.74% in the fourth quarter vs. 13.8% for Wells Fargo (WFC) and 10% from JPMorgan Chase (JPM).

"We still have not approached the true earnings potential of Bank of America," CEO Brian Moynihan said, leading off the bank’s earnings call with equity analysts.

The bank says that losses in its mortgage unit were $1.1 billion in Q4’13 vs. $3.7 billion Q4’12. It made $11.6 billion in home loans in the most recent period, down close to 50% from the prior quarter.

Plus, legal expenses jumped to $2.3 billion in the fourth quarter from $916 million in the year-ago period.

Global Wealth

The number of advisors in the Global Wealth and Investment Management unit, which includes Merrill Lynch, continues to shrink, though the reps' average fees and commissions are growing.

BofA said it had 15,316 financial advisors as of Dec. 31, vs. 16, 611 a year ago and 15,624 in the prior quarter. When advisors working on the consumer and business banking operations are excluded, the number of Merrill advisors stands at 13,771 vs. 14,915 at the end of 2012 and 14,039 as of Sept. 30.

The 13,771 traditional advisors had yearly production of $1.005 million in 2013, up from $902,000 in 2012. For Q4’13, average fees and commissions were $1.039 million vs. $1 million in Q3’13.

The wealth-management group had revenue of $4.5 billion in Q4’13, a 7% increase from the year-ago period. Its pretax margin was 26.6%.

For the full year, revenue was $17.8 billion, and the pretax margin was 26.4%, up nearly 11% from the prior quarter and close to 6% from the year-ago quarter.

Asset management fees were $1.8 billion in Q4’13, a year-over-year increase of 15%. Long-term asset flows were $9.4 billion for Q4 and $48 billion for the full year.

Client balances of $2.37 trillion increased $83 billion, or 3.6%, for the quarter. Deposit balances moved up quarter over quarter by 1.4% to $245 billion, while loan balances jumped 1.3% to $119 billion.

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Check out ThinkAdvisor's Q4 Earnings Calendar for the Finance Sector.

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